The expanded sanctions against Russia were a response to its (i)
interference in Ukraine, (ii) annexation of Crimea and (iii)
cyber-related election-meddling activities in the United States.
CAATSA encroaches significantly on the President's ability to
act unilaterally. CAATSA codifies certain previously imposed
Russia-related executive orders and removes President Trump's
discretion to remove sanctions imposed by his predecessor. The law
also includes provisions requiring the President to report to
Congress on any action to terminate or waive most Russia-related
sanctions, or to make a licensing decision that "significantly
alters" U.S. foreign policy with respect to Russia. The
President is prohibited from implementing his proposed actions
during a 30-day (and, in some cases, 60-day) Congressional review
period, unless he is authorized to act by a joint resolution of
approval.

CAATSA directs the Secretary of the Treasury to strengthen and
tighten, within 60 days, certain "Directives" issued by
the Office of Foreign Assets Control ("OFAC"). These
Directives authorize so-called "sectoral" sanctions
against the financial services, energy, and defense industries in
Russia, and restricts U.S. persons from engaging in specific types
of dealings with targeted companies.

CAATSA provides authorization for a number of additional
Russia-related sanctions, including "secondary" sanctions
that would impose restrictions on foreign (and, in some cases,
U.S.) persons that engage in specified activities. For example, the
President is directed to impose sanctions on foreign persons who
knowingly make a significant investment in "special" oil
projects inside Russia. While these and other sanctions are
described as "mandatory," the President generally must
take the step of determining that a company or individual meets the
law's criteria before the sanctions have effect. CAATSA
provides for optional sanctions against persons involved in certain
Russian energy export pipeline projects. (In response to European
concerns about the potential impact on current pipeline
infrastructure projects, these sanctions are to be applied "in
coordination with allies of the United States.")

A veto-proof majority in both houses of Congress gave President
Trump little choice but to sign CAATSA. He made his displeasure
with the law clear in a series of signing statements. In an initial White House Statement, President Trump
stated that while he favors "tough measures," he claimed
that Congress included a number of "unconstitutional
provisions" that may undermine the President's
constitutional authority to conduct foreign relations. In a subsequent White House Statement, President
Trump added that he signed H.R. 3364 for "the sake of national
unity," but voiced serious concerns with its content:

"By limiting the Executive's flexibility, this bill
makes it harder for the United States to strike good deals for the
American people, and will drive China, Russia, and North Korea much
closer together. The Framers of our Constitution put foreign
affairs in the hands of the President. This bill will prove the
wisdom of that choice."

In a final remark on Twitter, President Trump
expressed concern and frustration with the state of the U.S.-Russia
relationship, adding that the American people should "thank
Congress" for the "very dangerous low" in bilateral
relations.

Commentary /
JamesTreanor

The enactment of CAATSA was a disappointment to President Trump,
and surely dashed the hopes of those with a commercial interest in
renewed economic cooperation between the United States and Russia.
At the same time, the law provides a level of certainty with
respect to the future of the Russia-related sanctions program
– something that had been lacking since last November's
presidential election. Unless President Trump challenges
CAATSA's Congressional notice and review provisions with action
stronger than a signing statement or a tweet, companies should plan
for Russia sanctions to remain in place for the foreseeable
future.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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On August 2, 2017, US President Donald Trump signed a wide-ranging piece of legislation, the Countering America's Adversaries Through Sanctions Act, which expands existing sanctions and imposes new ones on Russia, Iran, and North Korea.

On July 24, 2017, the United Kingdom's Serious Fraud Office announced that it had opened an investigation into the mining giant Rio Tinto PLC after the company allegedly made payments to a contractor in Guinea ...

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